Teaching kids about money can be a daunting task, but is more necessary now than ever. Debt balances for households in the U.S. increased 1.2% in the first quarter of 2017, reaching $12.73 trillion, higher than its previous peak in 2008. This rise in household debt was weighted by increases in student loans, mortgages, and auto loans, as well as credit card debt.

As we all know, having excessive amounts of debt keeps us from making as much of an impact on our futures as we’d like. At McCabe & Associates, we encourage you to help those who look up to you better understand money and its impact. When you do, consider these guidelines:

  1. Teach Them How to Budget: If you give your child an allowance, or if you have working teens in your home, encourage or require them to set a budget, putting a certain amount toward savings, donations, or whatever they choose, and the rest toward discretionary purposes. It’s never too early to learn this critical money management skill.
  2. Encourage Entrepreneurialism: Kids and teens have a great deal of creativity – help them put it to use! If they want to sell or build something, or run with an idea, assist them in putting together the groundwork for a small business. Teach them how to research pricing, profit, and marketing. You never know, you could be teaching the next Steve Jobs about starting another Apple!
  3. Teach the Long-Term Impact of Saving: Even adults struggle with waiting for gratification, especially in today’s society. Encourage your children to save up for something they really want instead of frittering away small amounts of money on items they are just “ok” with. Teach them that every choice we make in the short term has a long-term impact. If they buy that candy bar today, they might not have enough money to buy that new video game when it comes out next month.
  4. Discuss the Different Kinds of Debt: Especially with your teens, discuss how some investments may be worth taking on the debt that accompanies them. This will come into play as you discuss the different price tags that come with different colleges, or the cost of college overall, and how college graduates tend to earn more than people without degrees, making the investment in education worthwhile. Credit card debt, on the other hand, does not have value within it, and interest payments can really add up over time.

There are plenty of creative ways to teach and instruct your children about money and saving. At McCabe & Associates, we help our clients do more than save for themselves. We want to help them make a better future for the entire family. We’d love to discuss this with you. Feel free to contact our office and make an appointment with one of our advisors.